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TaxMasters, Roni Deutch and JK Harris Tax Preparation Litigation

By Gary Bode CPA, on September 22nd, 2010

Tax Resolution: your local Wilmington NC CPA is just as effective, less expensive and more ethical

Sleepless in Wilmington NC? Then you’ve probably seen commercials for JK Harris, Roni Deutch and TaxMasters. High pressure tax resolution companies. And all three are now are being sued by government entities:

JK Harris just settled a multi-million dollar lawsuit brought by eighteen states. North Carolina Attorney General Roy Cooper told the Wall Street Journal’s Tom Herman that, “Many consumers paid for tax help and got nothing but headaches in return.” Massachusetts Attorney General Martha Coakley said J.K. Harris, took advantage of people who paid for tax assistance and, in some instances, profited by taking their money and not giving them any help at all.

New York City Department of Consumer Affairs (DCA) Commissioner Jonathan Mintz announced an agreement to settle the City’s lawsuit against Roni Lynn Deutch (d/b/a The Law Offices of Roni Lynn Deutch) for deceptively advertising tax services. Roni Lynn Deutch has agreed to pay a total of $300,000, which includes $200,000 in restitution to consumers and $100,000 in fines to the City of New York. Also, as part of the agreement, Roni Lynn Deutch has committed to full compliance with the City’s Consumer Protection Law when advertising tax services. The agreement was submitted to the New York Supreme Court on December 19 for approval. California is suing her for $34 Million and also seeks a permanent injunction.

There are also now two federal suits against TaxMasters. One from employees for fair labor practices, and the other a class-action suit in PA. Texas Attorney General Greg Abbott is leading the charge against TaxMasters with a lawsuit filed in May that was spawned by hundreds of complaints and substantiated by an extensive internal investigation. His lawsuit calls for a permanent injunction to stop some of the company’s business practices and claims the company has repeatedly violated the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act.

Common Complaints

Deceptive Advertising

Few things disconcert folks as an IRS tax notice. These “offer mills” imply they can halt IRS asset seizures, free up IRS liens and settle a tax payer’s back taxes for pennies on the dollar. Apparently calls are then routed to a boiler room of high pressure sales people.

However, the IRS may temporarily suspend asset seizure while a recognized professional is working on a resolution.

No Work Done

The Internet is full of complaints that work, said to be filed with the IRS, apparently wasn’t. Now, sometimes internal IRS communications aren’t perfect and a phone call to a generic number may not have all the current information. Any local Wilmington NC CPA proactively provides clients with copies of all documentation.

Repetitive Requests for the Same Taxpayer Information

Not all folks who come to the attention of the IRS deserve it. But many of them, by nature, aren’t great at maintaining records. So a stalling tactic can be asking these folks to come up with non vital information and documentation.

The way we start the process, which is probably similar to any CPA in Wilmington NC, is to obtain a Power of Attorney for the IRS that allows them to talk to us. Then a transcript of your IRS account can be obtained. Then we ascertain what gaps exist and only pursue additional information that furthers the case.

No Refunds

There are firms who demand non refundable retainers. We ask for a retainer too: after all the IRS is the top creditor. But then we charge by the hour. If there’s retainer left, we refund it.

Legitimate Approaches

Correcting Errors

Sometimes the IRS is just looking for additional information.

Offers in Compromise

Public outcry from taxpayers drastically cut the number of Offers in Compromise the IRS accepts. Apparently many folks don’t realize that, or maybe hope springs. While an Offer in Compromise is a legitimate tactic, the IRS offers guidelines on what is acceptable. It may take some work to ascertain if your situation fits their profile, or can be made to fit their profile. But we evaluate filing IRS Form 656 in every back tax and IRS resolution case because, when appropiate, it is a powerful tax reduction technique.

IRS Negotiating

On IRS notices, the tax, penalties and interest are stated, generally, at their highest amounts. The IRS aren’t tax preparers. Clients have told me IRS agents actually encourage folks to have a CPA intervene, as actual amounts due can obviously be lowered. So, the high figures might be a way to grab your attention.

Preparing the Tax Returns

If the tax returns haven’t been prepared, even the Offer in Compromise tactic requires their preparation. Usually the taxes due are less than the demanded amount, which also lowers the interest owed. These may include:

Schedule C of IRS Form 1040 for self employed businesses and SMLLCs, including NC Form D400.

IRS Form 1065 for Partnerships and LLCs, including NC Form D403.

IRS Form 1120 for C Corporations and LLCs, including NC Form CD401.

IRS Form 1120S for S Corporations and LLCs, including NC Form CD401S.

Amending Past Returns

Sometimes, especially with self tax preparers, a CPA finds deductions and credits that should have been claimed. Amending these returns through, IRS Form 1040X, then lowers the taxes and interest due.

IRS Installment Agreements

Even with an Offer in Compromise, amounts are usually still due. Your local CPA Wilmington NC can help you structure a payment plan with them.

If you need a free initial consult on any accounting, tax, IRS or business issue, please call us at (910) 399-2705.

Thank you for a honest analysis of the offer mills. I recently quit working for one and find your analysis accurate. I am a CPA and found working for the firm to be distasteful and only stayed while looking for a firm with ethics.

As an IRS Collection Rep. everytime someone mentions going to any of this firms who claim unrealistic results, I try to get them to seach the internet with the company’s name and the word complaint and sitback and read. In 90% of the time they will file a Power of Attorney form and that is the last contact they have with us. Countless times taxpayers will have their bank accounts or wages levies all the while they think thsy are protected. I recommend if they have complicated or underreporting issues to seek a competent tax professional, I also advise that a good accountant or CPA is much cheaper than the franchise tax prepares. Not only is a professional available 12 months out of the year they are considerably less expensive, plus we see many incorrect returns, one that hurts the taxpayer is when the preparer to obtain a larger refund will list unqualified dependents for EIC. When we discover they were eligible the preparer is gone and the taxpayer is liable for repayment. Just do your research prior to handing over thousands of dollars that could be better used to pay your tax.

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It doesn't matter where you're located. Our virtual office accommodates long-distance and international clients. If you don't have a local CPA, distance isn't an issue. For a free phone consult, on most tax issues, call us at (910) 399-2705.